thieves within part 1: are you a victim of your own...

Thieves Within Part 1:

Are You a Victim of

Your Own Employees?

Cynthia McSwainSr. Vice President, Outsourcing Services

Allen, Gibbs & Houlik, L.C

March 23, 2016

The webinar will start

at 11:00 a.m. CT.

Administration

If you need CPE credit, please participate in all polls

throughout the presentation.

Administration

A recording of today’s webinar will be emailed for your

reference or to share with others.

Administration

For best quality, call in by phone instead of using your

computer speakers.

Administration

To ask questions during the presentation, use the

questions box on the right side of your screen.

Administration

Please provide your feedback at the end of today’s

presentation.

About the Speaker

Cindy McSwainSenior Vice President

Outsourcing Services

Leads AGH’s outsourcing services

10 yrs. audit experience

Member of AICPA, KSCPA, and

numerous civic organizations

• Understand occupational fraud

and its potential impact to your

business

• Use the “fraud triangle” to

evaluate likely areas of risk

• Understand why fraud happens

and mitigation techniques

• Watch for the red flags that

could require follow-up

Objectives

• Review why occupational fraud

occurs and its impact on your

business

• Identify the most commonly

occurring fraud schemes

• Understand why management’s

approach is the most important

fraud prevention tool

• Learn how to segregate duties

as an internal control

Register Now for Thieves Within Part 2

April 28

11 am CT

Register at

(LINK)

Polling Question #1

#AGHUwebinars

What is Fraud?

Occupational Fraud as defined by

“The use of one’s occupation forpersonal enrichment through the

deliberate misuse or misapplicationof the employing organization’s

resources or assets.”

ACFE’s 2015 Global Fraud Study, Report to the Nations on Occupational Fraud and Abuse

$$$$$$$$$$$$$$$$$$$$5% of annual revenue lost to fraud


Fraud Statistics


145kMedian fraud loss

in US dollars


Fraud Statistics


145kMedian fraud loss

in US dollars

Frauds lasted a median of

18 months before detection


Fraud Statistics

77%of studied frauds

were committed by individuals

working in:

• Accounting

• Operations

• Sales

• Executive/upper management

• Customer service

• Purchasing

• Finance


Fraud Statistics

Fraud Statistics

58%

recovered none of their losses.


Fraud Statistics

58%

recovered noneof their losses.

14%

made a full recovery.


Seen It!

Theft of cash on hand or cash

receipts

Theft of inventory or supplies

Fraudulent or inappropriate

disbursements

Misreported financial statements

Plus there's the entire subject of

corruption

Dragnet theme song?

http://www.televisiontunes.com/dragnet.html

https://www.youtube.com/watch?v=hDVVplAweZw

WANTEDfor

Occupational Fraud

Dragnet theme song?

http://www.televisiontunes.com/dragnet.html

https://www.youtube.com/watch?v=hDVVplAweZw

WANTED

WANTEDfor

Occupational Fraud

HaulCity issued 189 checks

totaling $6.4 million

SuspectDepartment of Public

Works Employee

City of Pasadena, California

Partial Recovery$5MM insurance claim

Method• Crime spree spans over a decade

• 300 fraudulent invoices (moving

utilities underground)

• Four bogus vendors

Haul$150K+ Cold Hard Cash (Known)

Suspect

No Recovery

MethodsLapping

Document manipulation

Branch office manager /

bookkeeper

VictimConstruction equipment sales &

rental company

$100MM annual revenue

WANTEDfor

Occupational Fraud

WANTEDfor

Occupational Fraud

Haul$130K+ Cold Hard Cash

Suspect

No Recovery

MethodLapping

Document manipulation

Branch office manager /

bookkeeper

VictimConstruction equipment sales &

rental company

$100MM annual revenue

WANTEDfor

Occupational Fraud

Haul$50K Cold Hard Cash

Suspect

Full RecoveryRetained Employment

Little change to controls

MethodBank wire transfers

Company Officer

Trusted Friend

Gambling Addict

VictimPublishing Company

$15-20 MM

annual revenues

Polling Question #2

#AGHUwebinars

The Fraud Triangle

The Fraud Triangle

Opportunity

Why Does Fraud Occur?

Lack of management

review

Lack of internal

controls

Annual Management Review

Assets most susceptible

to fraud, theft or loss

Areas lacking separation

of duties

Changes in staff structure

Organizational culture

Employee communication

mechanism

Internal Controls

Internal Controls defined:

Actions designed to minimize the potential

of material misstatement, fraud or other

financial misconduct or error.

Internal Controls

Two broad categories:

Management approach

Financial policies and processes

Internal Controls:

Management Approach

Ethical tone starts at the top

Communicatingethics in all we do

Educating and training all employees

Internal Controls:Management Approach

Hiring practices include

background checks

Implement Code of Conduct

Incorporate ethics into

performance evaluations

Two-way communication

Management – discussion of

ethics by leaders

Employees – Employee hotline

(Our Workplace)

Internal Controls:

Financial Policies and Processes

Recordtransaction

Custody of assets

Authorize transaction

Polling Question #3

#AGHUwebinars

Red Flags

The Fraud Triangle Revisited

Opportunity

Red Flags

Living beyond means

Never taking time off

Always an excuse

Significant changes in employee behavior patterns

Experiencing financial difficulties

Red Flags

Exhibiting control issues (unwillingness to share duties)

Unreasonable answers to questions

Numerous overrides

Lots of “white-out”

Inventory shortages

Red Flags

Inability to reconcile accounts

on a regular basis

Unexplained variances

Large number of “adjustments”

Unusual discrepancies between

actual and budgeted results

Polling Question #4

#AGHUwebinars

• Understand occupational fraud

and its potential impact to your

business

• Use the “fraud triangle” to

evaluate likely areas of risk

• Understand why fraud happens

and mitigation techniques

• Watch for the red flags that

could require follow-up

Recap

Register now

Thieves Within Part 2:

Powerful Fraud Prevention Tools for

Small Business

April 28 at 11 am CT

AGHuniversity.com

Everyone Plays a Part……

Thank

Cindy McSwainSr. Vice President, Outsourcing Services

[email protected]

http://www.linkedin.com/in/cindymcswain

@AGHCindy

316.267.7231

Check out our webinars!

AGHUniversity.com

Thank you!

thieves within part 1: are you a victim of your own...

Documents